Analysts see gold retesting $3,500/oz despite rangebound trade

Gold prices are currently stuck in a range around $3,300 per ounce as the market awaited impetus for the next move. 

After rising to more than $3,360 an ounce on Monday, prices have again slipped back near the $3,300 per ounce in today’s session. 

At the time of writing, the most-active contract on COMEX was 0.7% down at $3,323.87 an ounce. 

“Gold price (XAU/USD) struggles to capitalize on the previous day's bounce from the vicinity of the $3,265-3,260 pivotal support and attracts fresh sellers during the Asian session on Tuesday,” Haresh Menghani, editor at FXstreet, said in a report. 

Softening trade tensions

US Treasury Secretary Scott Bessent indicated on Monday that several of the United States' key trading partners have presented "very good" proposals aimed at circumventing the imposition of US tariffs. 

Bessent specifically highlighted the positive progress in these discussions, suggesting that India is likely to be among the first nations to successfully finalise an agreement. 

This development signals a potential easing of trade tensions on multiple fronts.

Furthermore, Bessent commented on China's recent decision to exempt specific US goods from its previously implemented retaliatory tariffs. 

He interpreted this action as a demonstration of China's intent and readiness to de-escalate the ongoing trade disputes between the two economic powerhouses. 

Such reciprocal actions are often seen as crucial steps towards reaching more comprehensive trade resolutions.

"Market sees trade tensions de-escalating and is less concerned about the Fed independence, reducing the demand for safe-haven assets for now," UBS analyst Giovanni Staunovo was quoted in a Kitco report.

Auto tariffs

In addition to these developments, Bessent also revealed that US President Donald Trump's administration is planning to mitigate the potential adverse effects of its automotive tariffs. 

The proposed strategy involves reducing some of the duties currently levied on foreign-made components that are utilized in the manufacturing of vehicles within the United States. 

This move could offer relief to both domestic car manufacturers and international suppliers, potentially preventing significant disruptions in the automotive sector's supply chain and price structures. 

The administration's approach appears to be multifaceted, addressing tariff concerns with various trading partners and seeking to minimize negative impacts on domestic industries.

Support and resistance for gold

However, economists have suggested that Trump’s policies have affected business sentiments around the world negatively. 

Trade tensions and higher tariffs could also lead to a rise in inflation and a recession. In such a scenario, gold would benefit further. 

Bullish rallies are likely to continue in the gold market, according to Geojit Investments. 

A break below the $3,300-$3,290 range, which aligns with the 38.2% Fibonacci retracement of the recent upward move from the mid-$2,900s or the monthly low, could see sustained support around the $3,265-$3,260 horizontal level in gold, according to FXstreet. 

“A convincing break below the latter will be seen as a fresh trigger for bearish traders and set the stage for an extension of the recent pullback from the all-time peak touched last week,’ Menghani said. 

Following closely is the $3,366-3,368 supply zone; a decisive break above this level should pave the way for gold to recover to $3,400 an ounce, according to Menghani.